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On the shut of final week, Vivendi’s plan to dump 70% of Common Music Group appeared easy sufficient.
The French firm deliberate to – and nonetheless plans to – spin out 60% of UMG onto the Amsterdam inventory alternate in September (September 21, to be exact).
As well as, Vivendi was to promote 10% of UMG in a $4 billion transaction to Invoice Ackman’s US-based SPAC, Pershing Sq. Tontine Holdings (PSTH).
That every one modified in the present day, when Ackman introduced that his SPAC was cancelling its acquisition, and transferring its share buy settlement to Pershing Sq. Holdings Ltd.
That, although, isn’t the tip of the matter.
In line with an announcement from Vivendi issued in the present day (July 19) relating to Invoice Ackman’s switcheroo: “The fairness curiosity finally acquired [by Pershing Square] in UMG will now be comprised between 5 and 10%. If it have been lower than 10%, Vivendi nonetheless intends to promote the shortfall to different buyers earlier than the distribution of 60% of the share capital of UMG to the shareholders of Vivendi scheduled to happen on September 21, 2021.”
Oh sure – issues are getting difficult.
Simply in case you didn’t decide it up from Vivendi’s assertion: regardless of having a share settlement to purchase 10% of UMG, it transpires that Pershing Sq. Holdings Ltd. now would possibly not accomplish that, and should as an alternative purchase a smaller quantity of the foremost music firm (someplace between 5% and 10%).
Ought to this happen, Vivendi shall be in a race to dump the distinction to a brand new, extra purchaser. (For instance, if Pershing buys 6% of UMG, Vivendi will then get busy flogging 4% of UMG to would-be consumers, and seeking to get a deal performed earlier than September 21.)
Ought to Vivendi efficiently offload the 70% of UMG it’s anticipated to by September 21 (i.e. 60% within the Amsterdam itemizing and an additional 10% to Pershing / Pershing plus a further suitor) it might imply that the French firm had bought some 90% of Common up to now 18 months.
Vivendi initially bought 10% of UMG to a consortium led by China’s Tencent in Q1 2020, earlier than promoting the identical consortium a further 10% in Q1 this yr.
Every of these offers value the Tencent-led consortium €3 billion ($3.5 billion at present alternate charges).
Daniel Kerven, JP Morgan Cazenove’s Head of European Media and Web Fairness Analysis, instructed in February that his firm was now suggesting “a blue sky valuation of €100 billion” for Common Music Group.
Explaining PSTH’s choice to scrap its UMG 10% acquisition earlier in the present day, Invoice Ackman wrote: “Our share value has fallen by 18% for the reason that transaction was introduced on June 4th. Whereas we consider our shareholders acknowledge UMG’s extraordinary attributes together with its enticing progress traits, enterprise high quality, and very good administration workforce, we underestimated the response that a few of our shareholders must the transaction’s complexity and construction.
“We additionally underestimated the transaction’s potential influence on buyers who’re unable to carry overseas securities, who margin their shares, or who personal name choices on our inventory.”Music Enterprise Worldwide
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